EXPLAINER: Why are baseball teams spending so much money?

Dec 21, 2022, 5:46 PM | Updated: Dec 22, 2022, 6:27 pm

New York Yankees' Aaron Judge, center, speaks while owner Hal Steinbrenner, left, and president Ran...

New York Yankees' Aaron Judge, center, speaks while owner Hal Steinbrenner, left, and president Randy Levine look on during a baseball news conference at Yankee Stadium, Wednesday, Dec. 21, 2022, in New York. Judge has been appointed captain of the New York Yankees after agreeing to a $360 million, nine-year contract to remain in pinstripes. (AP Photo/Seth Wenig)

(AP Photo/Seth Wenig)

Aaron Judge, Carlos Correa and Trea Turner combined for almost $1 billion in contracts. Xander Bogaerts, Jacob deGrom, Dansby Swanson, Carlos Rodón, Brandon Nimmo and Willson Contreras added up to another billion.

And that’s just nine players. Just one lucrative slice of baseball’s December spending spree.

What a difference a year makes.

It has been an epic holiday season already for several teams and players — a year after Major League Baseball locked out its players in an ugly labor dispute that delayed spring training.

Judge decided to stay with the New York Yankees for baseball’s biggest free agent deal ever, a $360 million, nine-year contract. Correa has a pending $315 million, 12-year agreement to join the New York Mets, and Turner signed a $300 million, 11-year contract with Philadelphia.

Including Thursday’s transactions, big league teams have handed out almost $2.9 billion in finalized contracts to major league free agents this offseason. That dwarfs the winter spending at this point in each of the last five years.

Through Dec. 20, 2021, that number was $1.9 billion. It was $187.4 million in 2020 — when teams were coming off the abbreviated season caused by the coronavirus pandemic — $1.6 billion in 2019, $655.95 million in 2018 and $413.25 million in 2017.

“Whether it’s ownership, whether it’s teams that fell short in the playoffs, teams that did well in the playoffs, teams that are ready to take a step from maybe a three-, four- or five-year rebuild, you look up and there’s few teams that are taking a step back,” Padres general manager A.J. Preller said during baseball’s winter meetings.

“Almost everybody (is) looking to advance forward. And that, along with some really quality players, is why it’s a very aggressive market.”


The March labor agreement that set industry rules through 2026 is one factor behind the increased spending, but there are several more forces at play.

The labor deal included an expanded playoff format, leading to more TV money for owners, and cleared the way for advertising on uniforms and helmets for the first time.

Under the five-year agreement, the luxury tax threshold rises to $244 million by the final season and tax rates remain unchanged at the initial, second and third thresholds. A new fourth threshold was added — supposedly aimed at Mets owner Steve Cohen — but it looks as if the billionaire views that hefty tax bill more like a nuisance as he pushes his team’s payroll to near $400 million.

If a more punitive threshold system, like a salary cap, had been instituted — almost certainly a popular concept among some owners — the spending likely would have been more muted this offseason.

Labor peace, of course, is good for business in general, but MLB also is in the process of dispersing the $900 million it received from The Walt Disney Co. for its remaining share of a streaming service technology company. That money is expected to go out to clubs before the end of the year.

MLB had new streaming network packages on Apple TV+ and Peacock last season, and it announced in October that fans watched more than 11.5 billion minutes of game action on MLB.TV during the regular season, a record for the streaming package.

This year’s World Series had lackluster TV ratings, and in a cord-cutting era, there are major questions about the viability of the regional sports networks that carry baseball games. Attendance was down 5% from its pre-pandemic level, but the spending indicates at least some optimism about baseball’s health.

It’s also reflective of an unusually deep free agent class. Judge is the reigning AL MVP, and Turner, Correa, Bogaerts and Swanson are All-Star shortstops. Justin Verlander won the AL Cy Young Award with Houston last season, and then signed an $86.7 million, two-year contract with the Mets.


Looming over all this spending is Los Angeles Angels star Shohei Ohtani, who can become a free agent after the 2023 season. If Ohtani gets to free agency, he likely would smash each of baseball’s financial records for player contracts.

Ohtani, who turns 29 in July, hit .273 with 34 homers and 95 RBIs this year. He also went 15-9 with a 2.33 ERA in 28 starts.

San Diego Padres third baseman Manny Machado can opt out of his $300 million, 10-year deal after the upcoming season, giving up $150 million over the final five seasons, and he almost certainly is monitoring all the money being handed out this offseason.

“People are discussing who are the free agents in ’24 and ’25 now because it’s like all a big puzzle,” San Francisco manager Gabe Kapler said. “So what happens this offseason is definitely going to impact what happens two offseasons from now.”

Machado’s decision is likely one reason why San Diego gave Bogaerts a $280 million, 11-year contract.

Also worth watching are baseball’s small-market owners, most of whom have been standing quietly off to the side since the end of the season. There is undoubtedly some private grousing going on behind the scenes, especially over some of the longer deals that dilute the intended effect of the sport’s tax system.

“We have a level of revenue disparity in this sport that makes it impossible for some of our markets to compete at some of the numbers we’ve seen,” MLB Commissioner Rob Manfred said during the winter meetings.


Lisa Lorey in New York contributed to this report.


Follow Jay Cohen at https://twitter.com/jcohenap


AP MLB: https://apnews.com/hub/mlb and https://twitter.com/AP_Sports

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


Associated Press

Ex-Packer Guion gets 1 year for domestic violence assault

GREEN BAY, Wis. (AP) — Former Green Bay Packers defensive tackle Letroy Guion was sentenced to one year in jail after pleading no contest in a domestic violence assault at his home last fall. Brown County Circuit Court Judge Thomas Walsh also ordered Guion on Tuesday to serve three years’ probation and complete a domestic […]

1 year ago

Joe Jarzynka...

Associated Press

Durant eager for Suns debut vs. Hornets after knee injury

CHARLOTTE, N.C. (AP) — Kevin Durant has been through quite a bit during his 15-year NBA career — but joining a new team midway through the season is a new one for the 13-time All-Star. The 34-year-old Durant doesn’t seem all that worried. Durant makes his highly anticipated Phoenix Suns debut on Wednesday night against […]

1 year ago

FILE - Miami Dolphins head coach Brian Flores stands on the sideline during the second half of an N...

Associated Press

Judge: NFL coach can press discrimination claims in court

NEW YORK (AP) — NFL Coach Brian Flores can pursue some of his discrimination claims against the league and its teams in court rather than through arbitration, a judge ruled Wednesday. The written decision by Judge Valerie Caproni in Manhattan was issued months after lawyers for the league tried to get the lawsuit moved to […]

1 year ago

Chicago Blackhawks goaltender Alex Stalock cools off in the first period during an NHL hockey game ...

Associated Press

Kane trade reinforces hard reality of Blackhawks rebuild

CHICAGO (AP) — After days of speculation, the harsh reality of the Chicago Blackhawks’ situation was reinforced by one move in a flurry of transactions ahead of the NHL trade deadline. Showtime is over, at least in Chicago, and a seemingly bright future is, well, way off in the distance. The reverberations of Chicago’s decision […]

1 year ago

FILE -  Yves Jean-Bart, president of the Haitian Football Federation, wearing a protective face mas...

Associated Press

Disgraced ex-Haitian soccer president announces he’s back

PORT-AU-PRINCE, Haiti (AP) — Haiti’s former soccer federation president whose lifetime ban from sport over sexual abuse allegations was overturned last month announced Wednesday that he is reclaiming his position. Yves Jean-Bart’s defiant announcement could lead to a standoff with FIFA, which already has appointed an emergency management committee to lead the Haitian Football Association […]

1 year ago

FILE - Green Bay Packers' Aaron Rodgers walks off the field after an NFL football game against the ...

Associated Press

Rodgers says decision on future will come ‘soon enough’

GREEN BAY, Wis. (AP) — Aaron Rodgers says he will make a decision on his future “soon enough” as the four-time MVP quarterback ponders whether to play next season and if his future remains with the Green Bay Packers. Rodgers, 39, discussed his future while speaking on an episode of the “Aubrey Marcus Podcast” that […]

1 year ago

EXPLAINER: Why are baseball teams spending so much money?